Court of Appeal considers the public interest test for protected disclosures

Sheryn Omeri considers the new judgment of Chesterton Global Limited v Nurmohamed, a recent whistleblowing case, in this blog.

While much judicial ink has been spilled concerning just about every other aspect of the provisions of the Employment Rights Act 1996 (‘ERA’) which provide protection to whistleblowers, the requirement that a worker “reasonably believe that any disclosure he or she makes is made in the public interest,” (‘the public interest test’) introduced by the Enterprise and Regulatory Reform Act 2013 from 25 June 2013, had not been considered before the case of Chesterton Global Limited & Anor v Nurmohamed [2017] EWCA Civ 979. The judgment of the Court of Appeal in that case was handed down on Monday, 10 July 2017.

The Claimant (Respondent to the appeal), Mr. Nurmohamed, was an estate agent who had been employed by the First Respondent (First Appellant) Chestertons, most recently prior to his dismissal as director of its Mayfair office. Following the introduction of a new system for the payment of commission to staff, linking such payment to the achievement of budgeted profits for the relevant department, Mr. Nurmohamed reported to his superiors that discrepancies in the monthly accounts appeared to show that the profitability of the Mayfair office was being artificially depressed so as to reduce the level of commission payable. At the full merits hearing, Mr. Nurmohamed gave evidence that he told his superiors that this affected over 100 senior managers’ earnings and he believed that the First Respondent was deliberately misstating between £2 and £3 million of actual costs and liabilities throughout the entire office and department network.

Following his dismissal, Mr. Nurmohamed brought a claim for automatic unfair dismissal for the principal reason of his having made protected disclosures. He also brought a claim for ‘ordinary’ unfair dismissal, contrary to s.98 of the ERA. Mr. Nurmohamed further claimed to have been subjected to a variety of detriments short of dismissal as a result of having made protected disclosures. The latter claim was brought against both the First Respondent and its HR Director. Chestertons admitted liability in respect of the ordinary unfair dismissal claim but disputed (together with its HR Director) Mr. Nurmohamed’s whistleblowing claims. The Employment Tribunal upheld all of the Claimant’s complaints. The Respondents appealed to the EAT which dismissed their appeal. They then appealed to the Court of Appeal on the single issue of whether the disclosures made by the Claimant were in the public interest. The charity, Public Concern At Work was given permission to intervene.

Lord Justice Underhill, who delivered the leading judgment in the Court of Appeal, noted that the inclusion in the ERA of reference to the public interest was intended to reverse the effect of the decision of the EAT in Parkins v Sodexho [2001] UKEAT/1239/00/2206 in which it had been held that whenever an employee made a disclosure about what he or she reasonably believed was a breach of his or her contract of employment, including of the implied term of mutual trust and confidence, that would, without more, ‘qualify’ for protection and potentially be protected. That is, a legal obligation which had been breached, was being breached or was likely to be breached (to use the language of s.43B(1)(b) of the ERA) could be a private, contractual one. In that case, Mr. Parkins alleged that he had been dismissed for having complained about being required to operate a particular machine without supervision which he said was a breach of his contract of employment.

Underhill LJ examined, in some detail, the Parliamentary materials concerning the insertion of the public interest test. His Lordship noted that both the relevant Minister and the sponsor of the relevant bill opposed a proposed amendment excluding from the legal obligations set out in s.43B (1) “a private contractual obligation which is owed solely to that worker” considering that this went too far to reverse the effect of Parkins. The Parliamentary material demonstrated that all that was intended by such reversal was the prevention of protection being accorded to disclosures made to pursue the worker’s “private” or “personal” interest as opposed to the public interest. Having examined the Parliamentary material, Underhill LJ then went on to make four observations about the nature of the exercise required by s.43B(1), namely:

that the words added in 2013, fit into the structure of s.43B, that is, which requires the Employment Tribunal to ask whether the worker believed, at the time that he or she was making it, that the disclosure was in the public interest and whether, if so, that belief was reasonable;

that in relation to the reasonableness of the worker’s belief, the Tribunal must be careful not to substitute its own view for that of the worker;

that the necessary belief is simply that the disclosure is in the public interest. The particular reason why the worker believed this to be the case is not of the essence. That means that a disclosure does not cease to qualify simply because the worker seeks to justify it after the event by reference to specific matters which the Tribunal finds were not in his or her head at the time the disclosure was made;

that the genuine and reasonable belief that the disclosure is in the public interest does not have to be the worker’s predominant motive in making it.

The Court of Appeal identified the specific issue before as being: whether a disclosure which is in the private interest of the worker making it becomes in the public interest simply because it serves the private interests of other workers as well.

The Respondents submitted that a mere multiplicity of workers sharing the interest was not sufficient; in order for a disclosure to be in the public interest it had to have a different character and extend beyond the workplace. At the opposite end of the spectrum, Public Concern At Work contended that a disclosure would be in the public interest if is in the interests of anyone else besides the worker making the disclosure.

Ultimately, the Court of Appeal adopted a middle-ground, in accordance with submissions advanced on behalf of the Claimant. At [37] of his Lordship’s judgment, Underhill LJ held that the correct approach was that in a whistleblower case where the disclosure relates to a breach of the worker’s own contract of employment (or some other interest of a personal character), there may nevertheless be features of the case that make it reasonable to regard disclosure as being in the public interest as well as in the personal interest of the worker. The question is one to be answered by the Tribunal on a consideration of all the circumstances of the particular case, using counsel for the Claimant’s fourfold analysis as a useful tool, subject to the note of caution that while the number of employees whose interests the matter disclosed affects may be relevant, this may not be sufficient to convert an interest which remains essentially private into one which is public within the meaning of that term as deduced (though not defined) from the broad intent behind the insertion of the public interest test.

The fourfold classification of relevant factors was paraphrased by the Court of Appeal as follows:

the numbers of the group whose interests the disclosure serves;

the nature of the interests affected and the extent to which they are affected by the wrongdoing disclosed – a disclosure of wrongdoing directly affecting a very important interest is more likely to be in the public interest than a disclosure of trivial wrongdoing affecting the same number of people, and all the more so if the effect is marginal or indirect;

the nature of the wrongdoing disclosed – disclosure of deliberate wrongdoing is more likely to be in the public interest than the disclosure of inadvertent wrongdoing affecting the same number of people;

the identity of the alleged wrongdoer – the larger or more prominent the wrongdoer (in terms of the size of its relevant community ie staff, suppliers and clients), the more obviously should a disclosure about its activities engage the public interest, although this should not be taken too far.

In the final analysis, the Court of Appeal does not appear to have taken matters much further than the Parliamentary materials. That is, it has not definitively determined what amounts to a disclosure in the public interest, suggesting instead that this will remain a highly fact-sensitive question. All that is known for certain is that a Claimant in Mr. Parkins’ position would not now benefit from statutory protection. It is perhaps by analogising with or distinguishing the facts of Mr. Parkins’ case that the public interest test will be applied going forward. Arguably the most helpful aspect of the Court of Appeal’s judgment in Nurmohamed is its reminder that by fitting within the existing scheme of s.43B(1), the public interest test requires ‘only’ a genuine belief that the disclosure is made in the public interest and that such a belief be objectively reasonable (viewed from the worker’s perspective). It does not require that the belief was in fact objectively reasonable in the sense that it was in fact correct. It will be interesting to follow the development of the case-law in relation to the public interest test as appeals are brought testing the limits of the elasticity of the Court of Appeal’s position.